The Michner Corporation is trying to choose between the following two mutually exclusive design projects: Year 0 1 2 3 Cash Flow (I) -$ 73,000 a-1. If the required return is 12 percent, what is the profitability index for each project? Note: Do not round intermediate calculations and round your answers to 3 decimal places, e.g., 32.161. a-2. If the company applies the profitability index decision rule, which project should it take? 27,500 33,000 39,000 b-1. If the required return is 12 percent, what is the NPV for each project? Note: Do not round intermediate calculations and round your answers to 2 decimal places, e.g., 32.16. a-1. Project I Project II Cash Flow (II) -$ 31,000 9,500 20,500 14,500 b-2. If the company applies the net present value decision rule, which project should it take? a-2. b-1. Project I Project II b-2.
The Michner Corporation is trying to choose between the following two mutually exclusive design projects: Year 0 1 2 3 Cash Flow (I) -$ 73,000 a-1. If the required return is 12 percent, what is the profitability index for each project? Note: Do not round intermediate calculations and round your answers to 3 decimal places, e.g., 32.161. a-2. If the company applies the profitability index decision rule, which project should it take? 27,500 33,000 39,000 b-1. If the required return is 12 percent, what is the NPV for each project? Note: Do not round intermediate calculations and round your answers to 2 decimal places, e.g., 32.16. a-1. Project I Project II Cash Flow (II) -$ 31,000 9,500 20,500 14,500 b-2. If the company applies the net present value decision rule, which project should it take? a-2. b-1. Project I Project II b-2.
Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
Problem 1PS
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The Michner Corporation is trying to choose between the following two mutually exclusive design projects:
Please help me solve this problem using Excel.
Transcribed Image Text:The Michner Corporation is trying to choose between the following two
mutually exclusive design projects:
Year
1
2
3
Cash Flow (I)
-$ 73,000
a-1. If the required return is 12 percent, what is the profitability index for each
project?
27,500
33,000
39,000
Note: Do not round intermediate calculations and round your answers to
3 decimal places, e.g., 32.161.
a-2. If the company applies the profitability index decision rule, which project
should it take?
Cash Flow (II)
-$ 31,000
9,500
20,500
14,500
b-1. If the required return is 12 percent, what is the NPV for each project?
Note: Do not round intermediate calculations and round your answers to
2 decimal places, e.g., 32.16.
a-1. Project I
Project II
b-2. If the company applies the net present value decision rule, which
project should it take?
a-2.
b-1. Project I
Project II
b-2.
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